Can BP Survive?

BP to date has spent $3 billion in clean up costs, and reimbursing businesses and homeowners along the coastlines. They have set aside $20 billion in future payments for damages, and environmental restoration based on an agreement made with the Federal government.  BP’s value as a company has declined by over $75 billion since the oil spill began.  Recent news reports indicate that BP is asking it’s minority partners, (Anadarko Petroleum and Mitsui & Co.), to start contributing to the clean up costs, and it is seeking cash infusion from Middle Eastern investors to help stabilize it balance sheet.  BP will also have to defend it self from  potential criminal and civil suits from the Department of Justice.  Additionally, based on Federal law, BP and partners Anadarko Petroleum and Mitsui & Co. also face a minimum fine of $1,000 per barrel of oil spilled. The government estimates 20 million to 43 million gallons of crude have gushed into the Gulf over the past nine weeks. If the spill were contained today, the fines would add up to between $480 million and $1 billion.  BP is self insured, and does not have any umbrella insurance policies from third parties to draw upon.  BP will face countless claims and future litigation as a result of this spill.  My questions to BP – is it really worth keeping this well operational?  Will you make that much more in profit from it?  Will the profit made from this well overcome the payout in claims?  Is ruining the environment and the lives of all of these people worth it to your long-term survival as a corporate entity?  Bankruptcy is always an option for BP, and a way to circumvent their liabilities from this disaster.  I would not be surprised if they choose to enter bankruptcy to avoid paying out on future claims.  It’s just another way for BP to end up surviving intact while the rest of the Gulf does not.